Recurrent larval and spat mortality (>80%) occurring in most Sydney rock oyster, Saccostrea glomerata, hatchery-runs since 1980 has prevented reliable commercial hatchery supply of spat and ultimately precluded the industry from accessing stock from breeding programs for faster growth and disease resistance. To overcome larval and spat mortality, the interactive effects of temperature and salinity on early life stages (embryos, larvae, and spat) of S. glomerata were investigated to optimize rearing conditions and thereby improve survival and growth. The early ontogenetic stages of S. glomerata were held at temperatures in the range from 16°C to 30°C and salinities in the range 10–35 ppt. Development of embryos to D-veliger larvae was significantly affected by temperature (P < 0.001), salinity (P < 0.001) and the interaction of these factors. Most rapid embryonic development occurred at a salinity and temperature of 35 ppt and 26°C. Growth of D-veliger, umbonate and pediveliger larvae was also significantly affected by salinity (P < 0.001) and temperature, as was the growth of spat. Salinity had a significant effect (P < 0.001) on D-veliger larvae and spat survival, whereas temperature had a significant effect (P < 0.001) on D-veliger and pediveliger survival. Survival and growth of umbonate larvae were not affected by either salinity or temperature within the range tested. Surface-response plots were also used to examine interactions between salinity and temperature. The optimal temperature for growth of D-veliger larvae was 28°C and for umbonate and pediveliger larvae was 30°C. Greatest length increases for D-veliger and umbonate larvae occurred at the maximum salinity level (34 ppt) whereas the salinity at which this occurred for pediveliger larvae was 26 ppt. Survival of larvae at these optima exceeded 95%. Best spat growth was at a salinity of 35 ppt and a temperature of 30°C. Spat survival at this salinity and temperature combination was 82%. Maximum spat survival was 93% and was measured at a temperature and salinity combination of 23°C and 30 ppt.